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LCD TV Panel Suppliers Hit by Sharp Drop in Demand from Chinese TV Makers, IHS Says
10/13/2015 |
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The top six TV makers in China are becoming more conservative, with TV panel oversupply and falling prices leading to a 16 percent fall in Q4 2015
SANTA CLARA, Calif. (October 12, 2015) - TV panel oversupply and falling prices are leading Chinese TV makers Hisense, TCL, Skyworth, Haier, Changhong and Konka to be more conservative in their panel purchasing plans, according to a new report from IHS Inc. (NYSE: IHS), the leading global source of critical information and insight.
The top six TV manufacturers in China plan to purchase just 14.8 million LCD TV panels, including open cell and modules, in the fourth quarter (Q4) of 2015, which is a 16 percent year-over-year decline from the 17.7 million displays shipped in Q4 2014, the report says.
As LG Display, Samsung Display, BOE, ChinaStar, AUO and Innolux are heavily invested in the Chinese market, the slowdown is expected to cause these panel manufacturers to adjust their capacity utilization still further this year.
"China is the largest global TV market, and this panel inventory adjustment and stagnant sell-through have caused TV makers in China to become more conservative in their panel purchases," said Nick Jiang, senior display analyst for IHS. "This conservatism is a major shift from the aggressive market in 2014, which has caused display makers to face over-supply and may induce panel prices to drop further at the end of this year."
In the first half of 2015, panel makers shipped 29.4 million TV panels to Chinese manufacturers, leading to a strong 15 percent year-over-year growth. However, in the third quarter (Q3), Chinese TV makers drastically reduced planned panel purchases. Manufacturers shipped 15 million TV panels to China in Q3 2015, which is a 6 percent year-over-year decline, with additional declines expected in Q4 2015. According to the latest TV Display Supply Chain Tracker - China from IHS Technology, the annual purchase of China's top six leading TV makers will reach just 59.3 million this year, a year-over-year decline of less than 1 percent since 2014. 
The leading panel suppliers for the Chinese market in Q3 2015 are: LG Display at 22 percent, ChinaStar at 20 percent, Innolux at 16 percent, Samsung Display at 15 percent, AUO at 13 percent and BOE at 10 percent. "These panel makers must now adjust their capacity and production strategy, which will make the market down-turn more severe by year's end," Jiang said.
At the end of August 2015, the average inventory level at the top six Chinese TV brands reached 6.5 weeks, a month-over-month increase of one inventory week. To prepare for National Day, China's top six TV makers bought more panels in August; however, due to weakening demand in the Chinese domestic market, inventory levels remained high in September. Amid lingering concerns over a panel supply shortage, Chinese set makers' inventory levels returned to normal at the end of 2014, and this strong appetite for TV panels lifted overall panel purchases in the first quarter (Q1) of 2015.
"China's top six TV makers' purchases in Q2 2015 exceeded our expectations," Jiang said, "but with the advent of the off-season, inventory is also on the rise, so there is pressure for further panel price reductions in Q3 and Q4 of this year." |
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